Oil spill fund chief says he welcomes oversight

WASHINGTON — The administrator of a $20 billion fund to compensate victims of last year's Gulf of Mexico oil spill said he welcomes an independent audit of how much money has been paid out and what calculations were made to arrive at those payouts.

The administrator, Kenneth Feinberg, has drawn criticism in particular from Gulf state lawmakers who say the fund lacks transparency and consistency. Feinberg said Thursday that any criticism or praise of the program's handling should be directed at him. The Obama administration has been hands off, he told the House Natural Resources Committee.

"It isn't perfect, but I think overall we're doing our job, we're delivering on the president's promise, and I'm proud to be here today," he said.

Regardless, Feinberg took an earful from lawmakers looking for someone to blame for the lingering effects of the April 2010 oil rig explosion that killed 11 people and created an economic and ecological disaster in the region. People continue to be frustrated by the claims process and the inconsistencies they see in payouts, said Rep. Steven Palazzo, R-Miss.

They've also on occasion felt insulted and hopeless about the process, Palazzo said. He pointed to Omega Protein, a large fish oil producer that has settled its $45 million claim with the BP fund. That settlement has been difficult for small business owners, who've seen their own claims rejected because they don't have the proper paperwork documenting earnings and other information.

"We have some very smart people," Palazzo said. "We have accountants and lawyers who are trying to help people all along the Gulf Coast — provide claims and support and documentation. And as they do it, they feel like they're giving exactly what the claim center wants and they're still rejected.

"Or the payments that are being offered are insulting, they're embarrassing," he continued. "That leaves them with either the option (to) take what they can, cut their losses or go to litigation. And quite honestly, people in Mississippi? Litigation's the last thing we really like to go to."

Feinberg told a congressional oversight committee that the sheer size of the fund and the number of claims makes some inconsistencies inevitable. The fund has been averaging more than 2,200 claims a week and has paid out $5.5 billion total. Of that, $1 billion has gone to the seafood industry, he said.

"What we do when we find these inconsistencies ... we will look at it, if it's inconsistent, we will true it up and pay the difference," Feinberg said. "We are not looking to promote inconsistency."

Both the House of Representatives and the Senate have floated proposals ordering an independent audit of the fund. The Justice Department is considering how to do such a review, Feinberg said.

Yet even the chairman of the House committee holding the hearing acknowledged Thursday that it's unclear who exactly has oversight of the Gulf Coast Claims Facility, as the fund is known. The $20 billion fund was established by BP — at the Obama administration's considerable prompting — to compensate victims of the oil spill. Congress has no control over the money in the fund, which expires in August 2013.

There's "a large hole in proper oversight and accountability to ensure legitimate claims are getting the attention they deserve and that the process of administering payments is conducted in a timely manner," the committee's chairman, Rep. Doc Hastings, R-Wash., said Thursday.

Many lawmakers said Thursday that they also are concerned about unforeseen damages, particularly those connected to the long-term effects of the oil spill on fisheries. They cite the collapse after the 1989 Exxon Valdez oil spill of herring fisheries in Alaska — though the causes of that fishery collapse remain unknown.

Feinberg acknowledged it was hard to know how to handle claims for damages that haven't happened yet — or might not happen at all.

"We are daily, weekly, monitoring what the experts tell us about the impact of the spill," Feinberg said. "When we make a final offer, we're trying to factor in what the best experts tell us about the future."